SENATE BILL REPORT

SB 5346

BYSenators Rasmussen, Williams, Lee, Moore, Kreidler, Anderson, Bauer, Zimmerman, Patterson, West, Saling and Bluechel

Affording exhibitors a fair opportunity to bid for motion pictures released in this state.

Senate Committee on Parks & Ecology

Senate Hearing Date(s):February 3, 1987

Majority Report:  That Substitute Senate Bill No. 5346 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Kreidler, Chairman; Bluechel, Kiskaddon.

Senate Staff:Gary Wilburn (786-7453)

                  February 4, 1987

AS REPORTED BY COMMITTEE ON PARKS & ECOLOGY, FEBRUARY 3, 1987

BACKGROUND:

The Motion Picture Fair Competition Act was enacted in 1979.  Under that Act, motion pictures may be distributed to theaters, called exhibitors, by negotiated license or by winning bid.  Blind bidding, which is bidding without an opportunity first to view the picture, is forbidden.  The distributor's invitation to bid must make certain disclosures including:  whether the run is exclusive, the geographic area for the run and the names of exhibitors being solicited.  The bid process must meet statutory conditions:  bids must be in writing, bids must be opened in the exhibitor's presence and the award must be disclosed to the bidders.  The distributor may award to a bidder or solicit re-bids if none were acceptable.

Enforcement of the law is by private lawsuit.  Any aggrieved person may bring suit for injunction or actual damages.  The prevailing party is entitled to attorney's fees.

In Seven Gables Co. v. MGM/UA Entertainment Co., the Washington Supreme Court ruled that once a motion picture distributor has solicited offers to bid or negotiate for the right to exhibit a motion picture, any negotiations between the distributor and an exhibitor concerning the licensing of the motion picture must comply with the bidding requirements of RCW 19.58.040.  After the decision, however, distributors remain free under the Act to request bids from, or negotiate with, only the exhibitors they choose.

SUMMARY:

Licenses for motion pictures are to be awarded through the bid process when requested by the exhibitor.  Distributors must give at least 72 hours written notice of a trade screening to all exhibitors within the state.

If an exhibitor notifies a distributor that it wishes to bid for feature motion pictures, then the distributor must solicit bids from each competitive geographic area in which the exhibitor operates a theater.  Bids must be in writing and sealed.  The distributor's bid opening must be in the largest city in the state.  The bid award must be to the best bid unless all bids are unacceptable.  If all bids are unacceptable, the distributor may solicit re-bids.  In determining an unacceptable bid, the distributor may consider the location, quality, seating capacity, exhibitor financial responsibility, proposed length of run, rental terms, guarantees and any other factor relevant to film revenue.  The distributor shall consider the same factors in determining the best bid.

If no bids are received in a bid and re-bid solicitation, then the distributor may award the motion picture by another method.  An exception is made from the general rule requiring bidding.  Independent distributors may award licenses by any method to an exhibitor with only one screen, if requested by that exhibitor.  There are definitions for independent distributor and single screen exhibitor.

Once a motion picture is awarded by bid, the license agreement may not generally be materially modified, except for acts of God.

A lawsuit may be brought for damages and actual reasonable expenses.  A prevailing exhibitor may elect to pursue actual damages or liquidated damages.  Civil penalties for intentional violations are provided.  There are exceptions for sneak previews, film festivals or other occasional, isolated, non-consecutive exhibitions.

EFFECT OF PROPOSED SUBSTITUTE:

The small exhibitor exemption is expanded to include operators of one theater with two screens.  The requirement of notice at least 72 hours prior to a trade screening is eliminated.  Bid solicitation is as broad geographically as requested by an exhibitor, rather than in all competitive areas in which the requesting exhibitor operates a theater.  Modifications to agreements awarded by bidding may be made provided all parties to the original bidding are notified.  The bill's provisions for remedies are deleted and an expedited arbitration procedure is added.  The definition of "best bid" is changed to delete the reference to film revenue and add the factors which relate to a bid's acceptability.  "Quality of projection" is added as a factor.

Fiscal Note:      requested

Effective Date:The bill contains an emergency clause and takes effect immediately.

Senate Committee - Testified: Bud Saffle, Motion Picture Exhibitors of WA; Darlene DeMaria, Walt Disny Company; Ann Browder, The Market Theater; Gordon Walgren, MPCY; Bruce Russell, Local 175; Bill Fritz, Motion Picture Association of America; Larry Moyer, Moyer Theaters; Ray Hallett, Hallett Cinemas; Tom Moyer, Sr., Tom Moyer, Jr., Moyer Theaters; John Thrift; Randy Finley